European businesses urged to get into Asia

European businesses urged to get into Asia

JAKARTA (JP): European businesses were encouraged yesterday to
increase participation in the development of infrastructure and
small and medium enterprises (SMEs) in Asia.

President Soeharto, at the opening of a three-day Asia Europe
Business Conference yesterday, said there was an urgent need to
develop SMEs in Asia, Indonesia in particular, because their
development would have a direct impact on people's welfare.

He asked conference participants to come up with ideas and
recommendations on how to increase SMEs' market access,
technology and capital.

"The growth of small enterprises will be beneficial to medium-
sized enterprises and the latter's growth will open new business
opportunities to big businesses," he said.

Hirokazu Nakamura, chairman of the board of Mitsubishi Motors
Corp, said yesterday that a key to raising the competitive
strength of SMEs was to let them cooperate with each other.

"SMEs are brimming with entrepreneurial spirit. Usually, if
there is a business opportunity, they have the strength to seize
it without leaning on others. But because of their small scale,
they are sometimes placed in a disadvantageous position,"
Nakamura said.

He said the situation led to a need for support from the
government and large corporate clients in the areas of finance,
taxation, information supply and technology assistance.

This was particularly important in the case of developing
countries, he added.

"It is also necessary to give consideration to the fostering
of SMEs in the area of trade policy," Nakamura added.

The conference, a follow-up of the first Asia-Europe Meeting
(ASEM) held last year in Bangkok, is discussing the development
of SMEs, trade, investment and infrastructure facilities; the
direction of Asia-Europe cooperation in the future; and business
matchmaking.

Speakers scheduled for today's plenary sessions include Prof.
Tommy Koh of Singapore's ministry of foreign affairs and
executive director of the Asia-Europe Foundation; and Sir Charles
Powel, director of Jardine Matheson Holdings and former foreign
affairs and defense advisor to former United Kingdom Prime
Minister Margaret Thatcher and John Major.

Soeharto said yesterday that Asia, and Indonesia in
particular, needed more infrastructure.

"Economic relations between Asia and Europe depend on the
availability of adequate infrastructure in both regions ...
Infrastructure development in a number of Asian and European
countries is also a profitable business opportunity," he said.

The Indonesian Chamber of Commerce and Industry chairman,
Aburizal Bakrie, told the meeting that infrastructure development
played a critical role not only in spurting economic growth but
in promoting strategic alliance as well.

The World Bank has estimated that the global need for
infrastructure investment in the next 10 years (1995 to 2004)
would reach around US$1.5 trillion, including $600 billion for
transportation, $490 billion for energy, $250 billion for
telecommunications and $150 billion for water supply and
sewerage.

Aburizal said the critical issue regarding infrastructure
development in Asia was the fact that both the public and private
sectors' access to investment funds was far less than demand.

"So far the public sector in Asia has managed to mobilize
funds amounting to only $85 billion," he said. Meanwhile, private
sector involvement in ongoing infrastructure projects in Asia
reached only 10 percent of their total value.

"This shows that countries in Asia not only lack
infrastructure, but are also inefficient and inept at carrying
out such projects," he said.

"Asian governments are not financially able to provide for the
huge infrastructure needs, and the involvement of the private
sector is limited," he said.

The situation, he said, allowed strategic alliances between
Asian and European businesses.

EU exports to Asia increased from $81.3 billion in 1989 to
$178.05 billion in 1995, while imports increased from $126.58
billion to $219.3 billion in the same period.

The highest sectoral growth of exports to the EU was in
manufacturing, growing at nearly 22 percent per annum over the
1970/1992 period.

Among the slowest-growing sector was agriculture.

"The reason for this slow growth is lack of familiarity. Asian
agro-based products have long been perceived in Europe as having
low quality and as being a threat to national production,"
Aburizal said. (pwn)

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